Because it’s currently so hard to buy a home, many buyers are considering an alternative – building one. But before you decide if building a home is right for you, be sure to consider everything involved. Not only is it generally more expensive to build a home than it is to buy an existing one, there’s a lot of potential stress involved as well. However, there’s no denying that building a home from the ground up is the best way to ensure that you get everything on your wish list.
Let’s take a closer look at some of the key things to consider when deciding between building and buying a home:
Benefits of Building a Home
While it will typically cost you more money to have a home built than it will to buy a comparable home, it’s important to consider the current housing market. With so few houses for sale, there’s more competition amongst buyers, which can cause home prices to rise. So, if you’re finding it impossible to find a home within your budget that you won’t have to extensively renovate, it might be worth considering a new build. With a newly built home:
• You will be the first one to live in the home
• All systems and appliances will be brand new (and likely energy-efficient)
• You can customize many of the home’s exterior and interior features
• You likely won't need to make significant home repairs for many years
• It can be easier to choose the perfect location
Potential Drawbacks of Building a Home
While there are certainly many advantages to building a home, a new home construction project can feel overwhelming at times. There are many more steps involved with building a home than there are with buying one. To start, you’ll need to find land upon which to build, which can be difficult if you live in an area that has been highly settled. You’ll also need to ensure that the land is properly zoned and that you’ll be permitted to build there. And unless you have sufficient cash on hand, you’ll need to secure a loan in order to purchase the land.
In addition to buying your land, you’ll also have to search for a reputable builder and secure a construction loan or other type of financing.
Additional downsides to building a home may include:
• Unforeseen expenses. In late 2020 and early 2021 there was a sharp increase in lumber and plywood costs, which significantly drove up prices for newly constructed homes. While those prices have started to fall again, the unpredictability of building material costs could have a big negative impact on your wallet.
• Wait times. It typically takes around 11 months to build a home in the Northeast, so you’ll need to consider whether you can realistically wait that long. If you’re an existing homeowner looking to take advantage of the current seller’s market, you may not want to wait nearly a year to sell your home. And selling before your home is finished being built means you’ll need to secure temporary housing – not to mention having to move your things twice! There’s also the hassle of potential construction delays to consider as well.
• Nothing is “included”. When you purchase an existing home, the sellers will typically leave behind things like appliances, light fixtures, and wall mirrors. In some cases they may even leave items like swing sets, window treatments, or television sets. When you’re building a home however, it’s important to note that you’ll be purchasing everything yourself. Be sure to factor those expenses into your home construction budget.
The decision to build or buy a home is a big one that requires a lot of careful consideration. Be sure to weigh all of the pros and cons to ensure that you’re making the right choice for you and your family. If you think that a new home build is something you’d like to explore, or if you’ve already made up your mind and are ready to apply for a land or construction loan, BankFive is here to help! Schedule a free consultation with one of our home loan experts today.